Correlation Between Six Flags and Madison Square

Can any of the company-specific risk be diversified away by investing in both Six Flags and Madison Square at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Six Flags and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Six Flags Entertainment and Madison Square Garden, you can compare the effects of market volatilities on Six Flags and Madison Square and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Six Flags with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Flags and Madison Square.

Diversification Opportunities for Six Flags and Madison Square

0.43

Correlation Coefficient

Six Flags  Madison Square

Very weak diversification

The 3 months correlation between Six and Madison is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden and Six Flags is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Six Flags Entertainment are associated (or correlated) with Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Six Flags i.e., Six Flags and Madison Square go up and down completely randomly.

Pair Corralation between Six Flags and Madison Square

Considering the 90-day investment horizon Six Flags Entertainment is expected to under-perform the Madison Square. In addition to that, Six Flags is 1.32 times more volatile than Madison Square Garden. It trades about -0.1 of its total potential returns per unit of risk. Madison Square Garden is currently generating about -0.02 per unit of volatility. If you would invest  3,305  in Madison Square Garden on December 18, 2024 and sell it today you would lose (103.00) from holding Madison Square Garden or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Six Flags Entertainment  vs.  Madison Square Garden

Six Flags Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Six Flags Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Madison Square Garden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madison Square Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Madison Square is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Six Flags and Madison Square

The main advantage of trading using opposite Six Flags and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Flags position performs unexpectedly, Madison Square can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Madison Square will offset losses from the drop in Madison Square's long position.

The idea behind Six Flags Entertainment and Madison Square Garden pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.